Stripe is one of the biggest payment processing services on Earth. It’s also one of the most valuable privately-held companies in the US. In its last round of funding, the company’s value was estimated at $95 billion. Now, rumors are swirling that Stripe is planning to make an IPO in the near future, and that the company’s value could be north of $100 billion.
That’s a lot of money, so it makes sense that many investors are looking to buy Stripe stock. But Stripe is a privately-held company. How do you buy stock before the IPO?
Here’s a quick look at the company overall, as well as why you might want to invest.
Stripe: The Basics
Many people know Stripe in its role as a payment processor, similar to Venmo or the Cash App. But Stripe’s consumer-facing app is just a tiny part of its business. Most of the company’s income comes from its role as a processor for ecommerce sites. Amazon, Shopify, Zoom, Lyft, and even Google rely on Stripe’s servers for processing secure payments.
Stripe also offers a set of ecommerce APIs for third-party sites to implement their services. They offer a point-of-sale solution for brick-and-mortar stores, and they support subscriptions, invoices, and even lending. If that’s not enough, Stripe supports many powerful integrations for shipping, analytics, accounting, and more.
This is a very lucrative business, and Stripe is growing by leaps and bounds. In 2020, the company earned $7.4 billion, a massive 393% increase from 2019’s $1.5 billion haul. Given current trends, there’s no reason to expect them to slow down any time soon.
Stripe Financing
Stripe has been funded by ten rounds of private equity investment, dating back to 2010. Since then, they’ve raised $2.2 billion from 39 investors. The most recent round, held in March of 2021, raised $600 million, and increased its overall value to $95 billion. This makes it the second-highest valued privately-owned company in the US, after SpaceX.
Is Stripe Planning an IPO?
As of March, 2022, there has been no official announcement from Stripe regarding an IPO. No registration documents have been filed, so it’s going to be at least a few more months. Even so, CFO Dhivya Suryadevra, who was hired in 2020, is known to be in favor of going public. This means that it’s just a matter of time until Stripe goes public.
So, How Do I Buy Stripe?
For now, Stripe is a privately-held company, which means Stripe stock shares are not available on the stock market. But that doesn’t mean you can’t invest. If you’re willing to jump through a few hoops, you can buy stocks before the company goes public. Let’s talk about how you can invest.
Invest in a Pre-IPO
Believe it or not, you don’t have to be an accredited investor to buy shares in a privately-held company. There are actually pre-IPO markets, where you can purchase shares directly from the private investors. There’s no guarantee that any shares will be available, and the pricing isn’t as transparent. But if you want to get in on the ground floor, this is how it’s done.
Here are a couple of pre-IPO markets you might want to check out:
- Forge Global is the world’s largest pre-IPO market. The $100,000 minimum investment is fairly steep, and will be too rich for most people’s blood. But if you’ve got the cash, this marketplace is likely to present the most opportunities for investment.
- EquityZen is a similar service, but they don’t facilitate trades between a buyer and a seller. Instead, they buy pre-IPO shares directly, and make them available to the public. This market isn’t quite as big as Forge Global, but it has a lower minimum investment. If you’ve got $10,000 in cash, you’ll be able to buy in.
Wait For the IPO
As we discussed, there’s no guarantee that pre-IPO shares will be available for purchase. If you can’t find shares before the IPO, the next-fastest way to invest is to invest during the IPO. You’ll probably pay a little more than you would before the IPO. However, because the company is already public, you’re exposed to less risk. With a pre-IPO purchase, it’s always possible that the company might decide to stay private, which could make it hard to sell your shares.
Wait Until After the IPO
If you’d rather not go through the trouble of making an IPO purchase, you can always wait until after the IPO. That way, you can buy through an ordinary stock broker, or even through a trading app like Robinhood. You won’t be getting in on the ground floor, but you’ll still be investing in a company with huge growth potential.